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Marketing
Chapter 1
Overview of
Marketing
Dhruv Grewal
Michael Levy
McGraw-Hill/Irwin
Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved.
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Building Value Online
Benefits buyers and sellers
Prioritized searches
Customized ads
Customized
searches
Each
of these innovative marketing
companies succeeds because it
provides good value to its customers.
AIM, music, expanded
communication options
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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What is Marketing?
Marketing is an organizational
function and a set of processes for
creating, capturing*,
communicating, and delivering
value to customers and for
managing customer relationships
in ways that benefit the
organization and its stakeholders.
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Missing Component


Missing capturing value
Value capture is essential to successful
marketers
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Marketing is NOT
Simply about buyers and
sellers exchanging money
for goods and services
Simply about making
a profit
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Marketer’s Responsibility
Marketers must address the ethical implications of their
actions on society in general.
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Value
 The
fundamental purpose of
marketing is to create value for
both the firm and customer.
 Value is in essence what you
get for what you give up.
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Test Your Knowledge
Which of the
A)
B)
C)
D)
following statements about marketing is NOT true?
Marketing entails an exchange.
Marketing is simply about making a profit.
Good marketing requires thoughtful planning.
Because marketing costs money, good marketers
carefully seek potential customers who have both
an interest in the product and an ability to buy.
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Marketing’s Core Aspects
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Core One:
Satisfying Customer Needs and Wants
• Begins with understanding their
needs and wants
• Developing products and services
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Satisfying Customer Needs and Wants
How does a company address the diverse
needs and wants of consumers for dental care
products?
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Case in Point:
Crest
Challenge
Address the diverse needs and
wants of consumers for dental
care products.
Answer
Develop a deep understanding of
what benefits consumer are
seeking in their dental care
products and develop brands
designed to deliver those
benefits.
Results
Crest provides a wide variety of
dental care products to deliver
the desired benefits.
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Core Two:
Marketing Entails Exchange
• The exchange can occur between any
two parties
• Not simply a buyer and seller exchanging
money for a good or service
• Can be an exchange of information for
convenience
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Marketing Entails an Exchange
Communications/Delivery
Customers/
Consumers
(Buyers)
BARNES&NOBLE.com
Goods/Services
Producers
(Sellers)
Money/Information
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Test Your Knowledge
Which of the
A)
B)
C)
D)
following is NOT part of a marketing exchange?
Sellers provide products or services.
Sellers communicate and facilitate delivery.
Marketers assess the effectiveness of their
advertising.
Buyers complete the exchange by giving money
and information to the seller.
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Core Three:
Marketing Requires Product, Price, Place, and
Promotion Decisions
Product
Promotion
4P’s
Place
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Price
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Product
Goods
Services
Ideas
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Price
time
money
Price is everything
the buyer gives up
in exchange for the
product.
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energy
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Place
All activities necessary to get the
product to the right customer when that
customer wants it.
 Supply chain management is the field
that examines these activities.

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Place: Supply Chain Management
How does a company get the product to the
right customer when and where they want it?
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Case in Point:
H&H Bagels
Challenge
Answer
Results
To expand distribution beyond the
New York area.
Using an online distribution
system to allow customers all
over the world to order directly
from stores in New York City.
•H&H now ships bagels to over
20 different countries directly
from the shops in New York City.
•The product has become so
popular that it has been featured
in popular TV shows and movies.
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Promotion
• The communication
activities of marketing
• Used to inform,
persuade and remind
potential buyers
• Used to influence
their opinions or elicit a
response
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Test Your Knowledge
Promotion is ____________ by a marketer that informs,
persuades, and reminds potential buyers about a product or
service to influence their opinions or elicit a response.
A)
smoke-and-mirrors
B)
coercion
C)
teasing
D)
communication
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Entrepreneurial Marketing



RBK from Reebok
Sports, entertainment
and fashion
Competitiveness +
cutting edge style +
entertainment
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Core Four:
Marketing Can Be Performed by Both
Individuals and Organizations
B2B: Wholesaling is often only Business to Business
B2C: All retailing is Business to
Consumer selling
C2C: Swap Meets,
EBay, yard sales, etc.
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Core Five:
Marketing Occurs in Many Settings
Both profit and non-profit
entities
 Developing economies
 Entire industries

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Core Six:
Marketing Helps Create Value
Production-oriented era
Sales-oriented era
Market-oriented era
Value-based marketing era
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Adding Value



Harrods = extreme luxury
“By Invitation” loyalty program
Tied to level of spending with $88K or more
qualifying for the Chairman’s Club
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Value-Based Marketing


Firms must offer customers something in
excess of that being offered by the
competitors.
Firms must understand how each aspect of
their product/service creates value for
customers.
Discussion question #1
What do you think are the key features
of a hotel that create value?
Discussion question #2
How do the keys features vary
depending on the segment of traveler?
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Examples of Value Keys for Hotels
Service
Quality
Restaurant
Quality
Hotel
Personnel
Location
Convenience
of Booking
Rewards
Program
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Room
Comfort
Free
Internet
Service
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Value for a Business Traveler
Service
Quality
Room
Comfort
Rewards
Program
Free
Internet
Service
Location
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Value for a Leisure Traveler
Hotel
Personnel
Service
Quality
Room
Comfort
Restaurant
Quality
Location
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Value is in the Eye of the Beholder
That movie
was a waste of
money.
That movie
was so worth
seeing!
Discussion question
If they saw the same
movie, what could
account for the
difference in value
derived from the
experience?
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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How Firms Compete on the Basis of
Value
• Constantly changing
consumers
perceptions
• Firms must
constantly monitor
the marketplace in
order to create
value
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Test Your Knowledge
What must firms do to become value driven?
A)
Share information, balance benefits and costs,
and build customer relationships.
B)
Set low prices, put profit above service, and use
effective marketing strategies.
C)
Make logistics a priority, expand globally, and
always offer new goods and services.
D)
Keep a vigilant eye on the market-place,
undercut competitors, and provide competitive
salaries.
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Becoming Value Driven: Sharing
Information
Information technology such as
Customer Relationship
Management (CRM) programs
are increasingly used by
marketers to ensure that data is
transmitted throughout the firm.
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Sharing Information
Why is sharing and coordinating information
such a critical success factor for any firm?
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Case in Point:
Zara
Challenge
Answer
How does the flagship brand of
Europe’s fastest growing apparel
retailer keep up with the latest
trends?
By implementing sophisticated
information technology into its
customer tracking and supply
chain functions.
•Zara now has over 760 women’s
clothing stores in 55 countries.
Results
•Products move from design
through the supply chain and onto
the stores shelves in about two
weeks.
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Becoming Value Driven: Balancing
Benefits and Cost
• Understand key
benefits
• Focus on key
benefits
• Eliminate cost of
less strategic
benefits
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Becoming Value Driven: Building
Relationships With Customers


Take a long term view of customer relationships
Use data to assist in maintaining the relationship
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Why is Marketing Important?
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Marketing Expands Firms Global
Presence
Starbucks often promotes the same product in different
countries. What products do you see in common?
Starbucks US
Starbucks Germany
Starbucks Australia
Starbucks Taiwan
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Pervasive Throughout the Organization
Discussion question
How did Toyota use
the Scion Road Trip
to ensure that all
firm activities were
focused on creating
value for the Scion
customer?
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Marketing As Pervasive Across the
Supply Chain


Each step in the supply chain involves marketing
All members in the chain must ultimately focus on
creating value for their customer and the end user
consumer
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Test Your Knowledge
Which of the following would NOT be considered part of a
supply chain?
A)
consumer
B)
retailer
C)
manufacturer
D)
customer service representative
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Marketing Makes Life Easier and
Provides Employment Opportunities

Choices of products and services choices as well as
information about those choices

Employment in diverse fields such as research,
sales, promotions, global marketing
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Marketing Enriches Society
Discussion question
Why do you think breast
cancer is a good cause
for Avon Foundation to
support?
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Marketing Can Be Entrepreneurial
Though important to large firms, marketing is
equally important to the success of small
ventures—especially new ventures.
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Chapter 1 Glossary






Customer relationship management: A business philosophy and set
of strategies, programs, and systems that focus on identifying and
building loyalty among the firm’s most valued customers.
Goods: Items that you can physically touch.
Ideas: Include thoughts, opinions, and philosophies, and intellectual
concepts such as these also can be marketed.
Services: Intangible customer benefits that are produced by people or
machines and cannot be separated from the producer.
Supply chain: The group of firms that make and deliver a given set of
goods and services.
Supply chain management: Refers to a set of approaches and
techniques that firms employ to efficiently and effectively integrate
their suppliers, manufacturers, warehouses, stores, and other firms
involved in the transaction into a seamless value chain.